Oracle Corporation (NASDAQ: ORCL), claims to have experienced
a rebirth of interest in its supply chain management (SCM) capabilities as the
enterprise market sentiment have lately turned against mainly struggling so
called best-of-breed or pure-play SCM providers. To that end, Oracle has broadened
its supply chain software footprint. First, although belatedly embracing internal
development of a comprehensive suite of Supply Chain Planning (SCP) applications
as part of its e-business suite, Oracle has made up any lost ground with its
internal development of a comprehensive suite of Supply Chain Planning (SCP)
applications as part of its Enterprise Resource Planning (ERP) system. Oracle
has also been steadily building supply chain capabilities with its Oracle
Advanced Planning product suite. Also, with the release of Oracle
E-Enterprise Suite 11i.8 in late 2002, it added warehouse management
system (WMS) and transportation management system (TMS) capabilities to round
out the execution side of its budding integrated SCM system.
since most PLM deployments begin by trying to solve engineering-oriented problems,
the ERP vendors' PLM offerings including Oracle PLM are not yet in widespread
use. In fact, Oracle had tried its luck for several years with a stand-alone
PDM product, called Oracle Product Development Exchange, which
was going to include a combination of partner features and Oracle applications.
Oracle was to provide core functionality on the exchange to manage and collaborate
on development projects while integrating to various product development applications
in the users' back office systems. Partnerships included solution partners to
bring functionality directly to the exchange to complement Oracle's core competency.
Further, integration partners would provide direct integration to the Oracle
exchange to deliver design data from the back office, while implementation partners
would provide consulting services in the area of NPDI. However, the undertaking
never took off in earnest, and Oracle sold the product in 2000. Pure-play PLM
vendors might even indirectly gain from the increased awareness of the PLM software
market that their ERP counterparts have been helping with their recent campaigns.
The PLM market covers a wide range of above-mentioned previously unrelated software
applications and the suites offered from different vendors can vary dramatically.
Applications typically include Product Portfolio Management, Project Management,
Resource Management, Strategic Sourcing, Design Collaboration, Analytics, Product
Visualization, and others in addition to traditional engineering applications
like PDM and CAD. In other words, the PLM market is still in its infancy compared
to ERP, emerging from the traditional CAD/PDM market, primarily due to expanded
collaboration features and on the availability of Web-based technology.
no vendor provides all of the required solutions for a full PLM initiative at
this stage, so almost all solutions will involve best of breed components. See
PLM Program - An Incremental Approach to the Strategic Value of PLM for
more information on the components of a complete PLM solution.
the pure-play PLM vendors will increasingly compete more directly with the likes
of Oracle and SAP, which have often been their partners in the past. This competition
might likely lengthen the PLM specialist vendors' selling cycles and even close
the door to the opportunities in these ERP vendors' install bases. To remain
competitive, still, stand-alone vendors would do well to continue to focus on
easy integration with ERP suites, and to further perfect their selected industry
focus by delivering the industry best practices, terminology, data definitions,
process flows, etc. In general, the ERP suites do not yet fully accommodate
collaboration as well as stand-alone PLM packages designed for that purpose.
For more information, see Can
ERP Speak PLM?
Oracle customers will be thus faced with a familiar dilemma of choosing between best-of breed PLM solutions and integrated Oracle PLM suite. While adopting Oracle PLM might seem as a wiser long-term strategy, particularly for manufacturers with less complex design requirements, there might still be the risk of not meeting functional needs without customization, which would not be the case with best-of-breed PLM software. Moreover, the time and cost to deploy Oracle PLM have not been thoroughly proven yet, since users have had little experience and, consequently, there have been scarce references so far.
the fact remains that Oracle E-Business Suite is still the best-attuned offering
(in terms of pricing, vertical extensions, customizability, professional service
approach, etc.) to the needs of large, Oracle-technology-religious enterprises,
or for greenfield' sites. It appears that a real magic bullet to attract smaller
enterprises or enterprises with a bundle of disparate technologies and partners
is yet to be produced. Oracle Special Edition (SE) product,
a prepackaged product with fixed pricing for smaller companies (with fewer than
25 users), is still competing solely on price due to Linux' low hardware and
support costs. However, these do not include some horizontal functionality like
CRM or PLM at this stage, let alone vertical industry extensions.
On the other hand, as for its products and services arsenal for the upper-end of the market, Oracle offers one of the broadest ranges of business applications and technology for almost the entire realm of e-business. Oracle E-Business suite exhibits not only a web-centric architecture built on standards with Java 2 Enterprise Edition (J2EE), but also the new functional scope of enterprise systems, far beyond traditional ERP. The suite, now at version 11i.9, covers the buy side (e-procurement), inside the four walls enterprise operations (i.e., core ERP including financials, human resources (HR), business intelligence (BI), project management, manufacturing with advanced planning & scheduling (APS)), the sell side (CRM including call center, field sales, sales force automation (SFA), service & support, configuration management, order management, marketing campaigns, contract management, etc), and enterprise asset management (EAM). There is also a considerable SCM suite covering demand planning, SCP, supply chain event management (SCEM), supply chain execution (SCE) and inventory optimization.
Moreover, the portfolio also caters for collaborative business-to-business (B2B) e-commerce, across the holistic supply chain for buying/selling and product development, all through Oracle Internet Exchange suite, which also includes aspects of product lifecycle management (PLM). Overall, it involves over 140 totally integrated modules with still upcoming additional specific vertical functionality for claimed nearly 20 industries. All above has a potential for functional depth to the point of best, or one of the best, in many segments worldwide. Additionally, Oracle's strategy includes its own in-house developed mobile technologies, which it expects to see increasing use in the future.
Still, rarely, if ever, has any company been able to provide a product portfolio that is on the cutting edge in more than a limited number of applications and/or industries. While Oracle has a stalwart database and application server and its back-office applications are also well respected in certain vertical markets, its above new product enhancements may offer some value to its current customers, but will not likely help Oracle leapfrog competitive offering.
also continues to ring changes around its mantra of standard, pure vanilla,
all-encompassing enterprise applications. Although it is not yet giving up on
being a single vendor solution, it has at least recently modified advice to
users is an incremental, slice-by-slice' phased approach to deployment (see
Makes A U-Turn At The 'All Things To All People' Exit). This may indicate
Oracle's grasp of the reality that a vast majority of its customers are only
upgrading some components of the suite. Consequently, Oracle has aimed a substantial
part of its application sales force and its marketing message on selling upgrades
and add-on products to its existing customers, and much of the product development
activity seems to be devoted to creating extensions rather than addressing brand
The idea to build out from core enterprise business process automation to other more sophisticated outward-facing processes would be generally attractive if the ultimate target was not to replace all current systems with Oracle's e-business suite. Although this may be a compelling proposition to greenfield' sites (and how many of these are still out there?), many enterprises might remain skeptical or unimpressed when faced with the complexities of integrating with multiple legacy enterprise systems and more recent third-party, best-of-breed applications investments.
Oracle will have repeatedly realized with a heavy heart that the vast majority of real-world IT departments are a concoction of all sorts of enterprise applications — trading exchanges, SCM, e-collaboration with business partners, PLM, CRM, and a number of other components of e-business require disparate systems to work together. Oracle, in its mission to conquer the B2B e-commerce and back office needs of the corporate world, has introduced a very large all-encompassing solution suite. While it may still hope to dominate the back office, not many companies will adopt such a broad solution platform solely from Oracle. Rather, they will adopt only those functionally strong components that readily integrate to other, legacy solutions. Therefore, Oracle's recent endorsement of open technologies such as Java may allow customers to readily adopt only those solutions that fit their needs and that quickly integrate with their existing infrastructure.
Coming back to PLM, key concerns for prospects will consequently be domain knowledge in design and engineering-specific functions and integration, including currently poor connections from Oracle workflow to third-party business applications and CAD/PLM interfaces. As a matter of fact, Oracle might not even need any significant cutting edge technology or product to win new customers over. The company might be much better off if it should espouse an offering that is more amenable to all, but particularly to smaller companies, which means more digestible, more open, more vertically focused, more customization-friendly, and more consistently/clearly priced. The above-mentioned PLM development teams' formation may mean a good step towards addressing these long overdue issues. Time will also tell, therefore, whether Oracle will have used these slower economic times to get its act together and to position itself for a much-needed surge of new projects in the future. Otherwise, it may end up looking at PeopleSoft's rear lights, particularly if its bid to acquire it does not go through at the end of the day.
The market should regard Oracle's new mindset evolution as well as its new customer placating moves favorably, since the suite combines comprehensive functionality, updated technology, and greatly improved product quality and usability. Larger enterprises seeking broader e-business capabilities should evaluate Oracle if they feel comfortable with Oracle's one-stop-shop offering and if Oracle has a good track record in their industry vertical. Enterprises that favor a multi-vendor approach should still evaluate Oracle if the functional fit is good, but they should reckon with a challenging integration project. Additional caution should be exercised when deploying the 11i application components whose tires have not been quite kicked in live conditions. Use the forthcoming upgrade times to evaluate newly released modules and compare it with other products to weigh whether the intrinsic integration is more worthwhile than a possible limited functional scope and maturity. Also, any new contracts should be well scrutinized in order to ensure that the contract verbiage is clear and explicit as to preempt any future contract revisions, grievances and misunderstandings.
While early Oracle PLM adopters might initially have significant investment and not quite fulfilled PLM needs, they might also have a strong voice in future product directions. Discrete complex manufacturing and construction firms will have been the earliest adopters, and they should look at how well Oracle PLM supports their product information needs when they use other Oracle E-Business Suite applications.
Discrete and some process manufacturers seeking to facilitate manufacturing coordination across a supply chain, and which have new product development concerns, including part simplification and reuse, material rationalization, design collaboration, and project execution should keep Oracle as a choice on their short lists. However, even if their focus is more on project management and collaboration as well as on sourcing and product/service configuration, they should watch developments carefully. The competitive landscape will heat up, and manufacturers will see more choices, particularly those looking for a full suite of functions to manage product life cycles. Risk-averse Oracle customers with strong design PLM needs and an accompanied technocratic mindset may still want to opt for proven best-of-breed PLM solutions, while monitoring Oracle's progress in the future.
a more complete general discussion of how to select a PLM vendor, go to Selecting
A PLM Vendor
Jakovljevic is a research director with TechnologyEvaluation.com (TEC),
with a focus on the enterprise applications market. He has over 15 years of
manufacturing industry experience, including several years as a power user of
IT/ERP, as well as being a consultant/implementer and market analyst. He holds
a bachelor's degree in mechanical engineering from the University of Belgrade,
Yugoslavia, and he has also been certified in production and inventory management
(CPIM) and in integrated resources management (CIRM) by APICS.
Brown has over 15 years of experience in management consulting and
application software focused on the manufacturing industries. Jim
is a recognized expert in software solutions for manufacturing and has broad
experience in applying enterprise applications such as Product Lifecycle Management,
Supply Chain Management, CRM and ERP to improve business performance. Jim
created his consulting firm, Tech-Clarity Associates, to make the value of technology
clear to business. Jim can be reached at